Italy: will new laws hurt the economy?

Italy's government has passed a series of laws that partially repeal the previous government's labour market reform. For example, measures easing protection against dismissal have been rescinded and the relocation of production abroad is subject to fines. Italy's press lambastes this first major legislative package put forward by the Lega Nord-Cinque Stella coalition.

Like in kindergarten

Such measures will only scare businesses away, La Repubblica frets:

“A serious and responsible government has the duty to negotiate a new social pact with the business world. It does not have the right to treat it like a sort of cowboy-capitalist underworld. ... It must support big projects, not sabotage them. Without businesses there can be no growth and no work. And every business that leaves Italy is not a reason for joy, but for sorrow. Unfortunately all of this is over the heads of Cinque Stelle, which still seems to be lost in the kindergarten of positive degrowth, anticapitalism and antiestablishmentarianism.”

Euro exit through the back door

“It's no surprise that in recent days interest rates have gone up, reflecting growing distrust on the part of investors who are supposed to lend the government money to finance its economic and labour policy. The costs of the reforms must be quantified, and financing them must remain in the realm of the feasible. That's what the markets expect, and we owe it to the people. Unless, of course, there's someone at Lega Nord or Cinque Stelle who's hoping the markets will crash, triggering a financial crisis that stops credit flows to Italy. That could be the first step towards the control of capital flows and the nationalisation of banks aimed at forcing the citizens to finance the public debt. A step that would make exiting the euro unavoidable.”